How I Became a Millionaire While Working in My Pajamas

This is a guest post from the Millionaire Mommy Next Door. At her blog, MMND shares her recipe for success, happiness, and financial freedom. This piece originally appeared on her site in a slightly different format.

When my husband and I married (at age 23), I was working as an office assistant at a veterinary hospital earning $7.50 per hour. Unsatisfied with my low wages, I brainstormed ways to generate extra income.

Going to the dogs
I had worked as a volunteer dog-trainer for the Humane Society since age 14, so I combined my experience and youthful exuberance into a part-time side business. I offered dog-training classes and taught them in the veterinary hospital’s backyard. It was a win-win situation: my employers had a new service to offer their clients, and I was self-employed, with very low operating expenses.

I soon added home- and pet-sitting to the services I provided. Within about a year, my part-time business was earning more than my full-time wages at the veterinary hospital, so I quit my job. Over the next few years, I expanded my business and hired a few part-time employees. It was at that point that I discovered the joys of working from home in my pajamas.

In the pipesMeanwhile, my husband served as a company-employed plumber working for hourly wages, earning $30,000 to $35,000 a year.

At age 30, I sold my dog-training and pet-care business (for about $75,000) and we launched a plumbing and heating business of our own. My husband served as the project estimator and plumber; I was the business manager and bookkeeper.

Our customers quickly spread the word about our new plumbing company. Within our first year, we had generated enough business (via personal referrals) to keep us busy and profitable. Building a business based on personal referrals completely eliminated the need for us to spend a dime on advertising.

Doing the math
We soon faced an important decision. Should we expand our services by hiring other plumbers? Here are the two options we considered:

Option A:
Continue to manage a small in-home business operated by:

1 full-time plumber (my husband; 40 hrs/wk)

1 part-time apprentice (20 hrs/wk)

1 part-time bookkeeper (me; 5-10 hrs/wk)

With this model, we could earn $250,000 annual gross revenue with 50% net profit (low overhead expenses means a higher percentage of revenue remains as profit).

~or~

Option B:
Manage a storefront business operated by:

5 full-time plumbers (200 hrs/wk)

2.5 full-time apprentices (100 hrs/wk)

1 full-time bookkeeper (40 hrs/wk)

1 full-time manager (40 hrs/wk)

Under this scenario, we would earn $1,250,000 annual gross revenue (5 times more revenue, with 5 plumbers, than Option A above) with 10% net profit (higher overhead expenses means a lower percentage of revenue remains as profit).

Which business would you rather own? At first glance, most would likely say, “I’ll take the business that makes one-and-a-quarter million dollars each year!”

My husband and I chose Option A. Option A comes with fewer expenditures of time, energy and capital, as well as reduced risk. Option A nets the same profit as option B. As a bonus, option A allowed me to continue working at home in my pajamas.

Of course, if we hired 10 plumbers, we might make significantly more income. However, upon evaluating our priorities and values, my husband and I decided that we already made enough. We made the choice to work less rather than grow our business. In other words, a balanced lifestyle was, and still is, more important to us than money.

Learning to invest
Since our plumbing business required only 5-10 hours/week of my time for bookkeeping tasks, I decided to learn how to invest on my own (without assistance from our broker). I dedicated almost two years to the study of equity investing via books, web sites, and conversations with investors. Once I had acquired the knowledge, confidence and skills necessary to invest successfully on my own, I fired our broker, saving us thousands of dollars in commissions and fees.

Once we reached our crossover point (the average annual return from our investment portfolio exceeded our annual expenses, plus inflation), we scaled back on our business. My husband currently works only two or three days a week. Now, he can be selective in the projects he accepts. For instance, he no longer unplugs toilets, but he still enjoys creative remodeling projects. If he chooses to retire or to do something completely different, we’ll sell our plumbing business.

Achieving financial freedom
Before traveling to China to bring our new daughter home, I hired a bookkeeper to replace me so that I could focus my time, energy and attention on parenting and pursuing my hobbies. Additionally, I’ve learned how to effectively manage our investment portfolio in such a way that this task requires just one or two hours per month of my time.

We have truly attained freedom, financial and otherwise. Whether it be work, parenting, or play, we wake eager to spend each new day doing whatever we choose. What a gift!

[...] was her guest post on December 9th at Get Rich Slowly, a well respected personal finance blog. How I Became a Millionaire While Working in My Pajamas ? Get Rich Slowly I’ve provided the link above so you can form your own opinion. What happened there in the [...]

Dear Millionaire Mummy,
don’t be dishearted. I enjoyed reading your success story, those people who left all that cynical comments are the real losers. In fact I was disgusted to see all that negative energy.
Ignore them. Keep it up hun!

The part which bothers me about the story is the implication made by MMND that she made herself a millionaire while working in her pajamas. I feel it’s a poor image to relate to the rest of the article since it implies a level of easy going leisure which can bring to mind the sprawled on the couch and eating bon-bons stereotype. If nothing else, it implies ease of achievement without much effort on her part. Then once you start reading, it’s obvious she did not go it alone which tends to further contradict the “I” in the title of the article. Combined I can see how these two points raise some ire in folks who’ve had experiences, either personal or through friends and relations, of one spouse busting butt to make things work while the other is capitalizing off of them. If you look at MMNDs site, you will see she goes into more detail, and does agree that:

a. This was a partnership and she gives credit to her partner. However she points out that she feels it was her investing and financial skills that took them to a higher level and gained them their financial freedom.
b. She worked, both to get her part of the business to the point where she could manage it only a few hours a day and then to learn about investing.

Also, yes, she got “lucky” by selling her property at a high point in the market which added significantly to her investment portfolio. But that also came with both of them putting work into the property to make it salable, and also putting the work into her paying attention to the markets and economy and chosing a course that led to that “lucky” timing.

Is what she is saying necessarily new? No, most blogs aren’t. It’s just her take on how she did it. I agree with MMND that this is not a get rich quick story and shouldn’t be taken as such.

With respect to the sexism, I’m sure if I wrote an article entitled “How I aced College with no debt” and then described how my wife worked full time to pay for our living expenses and my schooling costs, while I spent my time attending study groups, getting good grades, and working for low wages at College to help defer some of the tuition, I’d hear how I didn’t and couldn’t have graduated without debt without her contribution.

Come on, guys. She can’t give away all her secrets. If she found a way to beat the market and she told everyone, that opportunity would probably no longer be there or work as well.

–What a baloney. With 6 billion people on the planet, not everyone is going to be able to service EVERYONE ALL THE TIME. So she could tell how she did it, how long it took, and other steps. But to do that would be generous, and in these times, I’ve noticed that is sorely lacking in the USA. We’re only abundant in greedy and duplicity.

Really useful article. Everything revolves around time although you shouldn’t let that hold you back and be an excuse to say to yourself “I haven’t got the time!” I do this all the time! Great advice about managing what you’re doing now effectively in order to have time for the side projects.

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